There wasn't a whole lot cooking for SSR Mining (NASDAQ: SSRM) stock in 2017, which is on track to end the year at nearly the same price it began with. That's not to say it was an uneventful year, however, as shareholders can attest. The stock saw its fair share of sudden pops and drops, although the latter more accurately describes affairs since the announcement of third-quarter 2017 earnings in mid-October. Investors sold the news of quickly falling silver and gold production.
That said, the company expects to meet its full-year 2017 guidance for production volumes and cash costs. And even though the closing of a major silver mine will continue to impact year-over-year comparisons for overall production levels, a new mine in Argentina is expected to begin producing in 2018. Does that have the potential to make 2018 SSR Mining's best year yet?
Image source: Getty Images.
The road ahead
SSR Mining has three producing mines, two in development, and five being explored for their potential. It ended mining operations at its San Miguel silver mine not long ago, which is having the effect of lowering 2017 production volumes and altering product mix (now heavily slanted to gold) compared to 2016. That's just life in the mining industry.
The three remaining active mines are performing as expected for the most part. However, the flagship Marigold mine, which is expected to account for up to 205,000 gold equivalent ounces in 2017, has encountered two notable setbacks.
First, SSR Mining began excavating a different part of the mine that has lower grade ore, which means more material has to be moved to produce the same amount of gold. Second, the clay concentration in this part of the mine is higher than expected, which has forced the company to slow certain aspects of the process. That unpleasant surprise forced management to lower Marigold's full-year 2017 production guidance to a range of 195,000 ounces to 205,000 ounces, down from the previous range of 205,000 ounce to 215,000 ounces.
Nonetheless, the company is on track to turn in a pretty solid 2017 campaign.
| Project or Category | Production Guidance, 2017 | Cash Cost Guidance, 2017 |
|---|---|---|
| Marigold mine (gold) | 195,000 oz. to 205,000 oz. | $640 per oz. to $670 per oz. |
| Seabee Operation (gold) | 75,000 oz. to 85,000 oz. | $575 per oz. to $625 per oz. |
| Puna Operations (silver) | 5 million oz. to 6 million oz. | $12.50 per oz. to $14 per oz. |
| Company total (gold equivalent) | 350,000 oz. to 380,000 oz. | $680 per oz. to $725 per oz. |
Data source: SSR Mining investor presentation.